Reps decry debt profile
From Madu Onuorah, John-Abba Ogbodo and Terhemba Daka, Abuja
THE Federal Executive Council (FEC) yesterday approved the 2010 Fiscal Strategy Paper and the 2010 - 2012 Medium Term Revenue and Expenditure Frameworks for the Federal Government, putting the projected budget deficit for next year at N1.026 trillion. The projected deficit in this year's budget is put at N836.6 billion.
Also yesterday, the House Representatives expressed concern over Nigeria's current debt profile put at $3.6 billion, saying the country is again drifting into huge indebtedness shortly after getting reprieve from foreign liabilities which almost grounded the country.
The House plans to debate the matter today.
The approval of the strategy paper and revenue and expenditure frameworks is a mandatory requirement of the Fiscal Responsibility Act under which there are clear benchmarks on the expected revenue and expenditure profile of the Federal government.
The framework also puts the crude oil benchmark for 2010 at $50 per barrel with a crude oil production output of 2.88 million barrels per day. The current production capacity is 1.6 million bpd.
The deficit figure represents 3.28 per cent of the nation's Gross Domestic Product (GDP).
The figures as released after the Council meeting show that because of the global economic crisis, the projected revenue for next year is put at N2.092 billion down from the 2009 budget figure of N2.265 billion.
Four ministers, Prof. Dora Akunyili (Information and Communications), Dr. Mansur Muhtar (Finance), Dr. Rilwanu Lukman (Petroleum Resources) and Mr. Michael Aondoakaa (Attorney General and Minister of Justice), said the strategy paper and fiscal frameworks were "principal components of government's public expenditure management plan. The aim is to ensure that planned spending is set at prudent and sustainable levels and is consistent with the government's overall medium-term fiscal objectives."
"The 2009 Appropriation Act authorized aggregate spending of N3,101.81 billion made up of N2,649.5 billion for MDAs (Ministries, Departments and Agencies) expenditure, N283.65 billion for debt service and N168.62 billion for statutory transfers. The projected revenue for 2009 was N2,265 billion with a deficit level of N836.6 billion."
In addition, the Council, presided by Vice President Goodluck Jonathan, approved the aggregate expenditure limit of N3,226.59 billion for next year comprising major expenditure heads of N157.3 billion for statutory transfers, N297.78 billion for debt service and MDAs spending of N2,77151 billion.
Muktar, who said that the strategy paper and fiscal framework is to be submitted to the National Assembly in line with the requirement of the Fiscal Responsibility Act, explained that "aggregate expenditure will minimally increase with deficit financing to help boost the economy."
The finance minister added that "in relation to capital expenditure, it is being reviewed downwards. Much of the 12.5 per cent increase in recurrent expenditure is in connection to personnel cost arising from promotions and others related issues."
He pledged that the federal government would start preparing in earnest to have the 2010 budget passed by the end of the year. And this is a commitment shared by both the Executive and Legislative branches of the Federal Government.
The Council also approved a total of N488,882,170.95 (N488.88 million), foreign counterpart funding of £1,876,426 ($1.87 million) and N49,037,922.40 (N49.03 million) as taxes for the award of contract for the consultancy services for condition assessment survey, development of scope of work and bill of quantities and supervision for the rehabilitation of the existing railway system including the Apapa and Port Harcourt Ports Railway Sidings.
The contract, which has a completion period of 18 months, according to Akunyili, "will enable the railway system improve on its performance of less than one per cent of the annual freight and passenger traffic to at least four per cent of the market share."
The Council also approved the establishment of two additional campuses of the Nigerian Law School in Adamawa and Bayelsa states.
Mr. Aondoakaa noted that "to ensure the smooth take-off of the proposed campuses, it was proposed that the states where the campuses would be sited would provide the necessary infrastructure required for the take off of the campuses."
The Justice Minister said he has already received commitments from the Adamawa and Bayelsa State governments in this direction.
Also, a total of N10,483,300,000 (N10.483 billion) was approved by the Council for the building of the headquarters of the Petroleum Technology Development Fund (PTDF). In addition, a total of N619,883,280 was also approved for civil engineering, mechanical and electrical engineering, architectural and quantity surveying consultancy works.
The Council also received the audit report of the Nigeria oil and gas sector for 2005 within the framework of the Nigeria Extractive Industries Transparent Initiative (NEITI).
And from their chambers, Representatives described as "disturbing" and "curious" the statement by the Debt Management Office (DMO) that Nigeria's foreign debt profile is $3.6 billion as at December last year.
In a motion on a Matter of Urgent National Importance, raised by Halims Agoda, the lawmakers are demanding to know the actual amount that Nigeria owes its foreign creditors; what the monies were used for; and its future implication on the Nigerian economy.
Earlier, Chukwuma Umeoji, noted that after the DMO had painstakingly removed Nigeria as debtor country by the past government, the present government is steadily reversing the trend.
"Events in recent times are showing that we have plunged head-on into the trap set by the developed nations that profit from the economy of the underdeveloped nations", he said.
He said that with the current revelation that our current external debt profile is standing at $3.6 billion, Nigeria would move to be the most indebted country in the world by 2020, and went on to argue his submission.
"Where there is zero or very low interest rates," he said, "administrative charges constitute very heavy economic burden when rescheduled for so many years"
According to him, most debtor countries are always not aware of this silent clause in the debt schedule, and even if they do, government officials chose to ignore it, if they have personal interest in taking the loans.
"There is this tendency to lend as a way of helping developing countries, but objectively speaking, these loans would perpetually mortgage our economy to the dictates of external forces", he said.
According to the only Labour Party member of the House, the Nigerian economy will be stunted, as the loan would see the country moving in circle while striving to pay.
"It is difficult to understand the gain of borrowing to finance projects which were provided for in the budget of Ministries Department and Agencies of government."
"The loans at the end of the day will end profiting the economies of the providers of the loans, as Nigeria bleeds to pay off as we did during the past administration", he said.
Umeoji argued that if Nigeria wants to really boost its economy, it should release funds meant for domestic debt servicing to inject liquidity into the system.
He said that the present generation of Nigerian leaders is mortgaging the future of the upcoming generation.
"Mortgaging the future generation of Nigerians through loans at this period of global economic meltdown is wrong in view of the revenue profile of the nation. What we derive from oil even in the face of the Niger Delta crisis is adequate to move Nigeria forward because it is far above the budget benchmark", he said.
Director-General of DMO, Abraham Nwankwo had presented a document to the Senate Committee on Local and Foreign Debts when they visited his office on Monday which says that Nigeria's external debt was $3.6 billion as at the end of last year, with the Federal government indebted by $2 billion and states government $1.6 billion
According to the published document in most Nigerian dailies, Lagos State owes $270.7 million while Oyo and Kaduna States debts are $110.47 million and $109.10 to make them the three most indebted states government in the country.
